NTPC loses 3% in last hour selling-spree

NTPC shares fell nearly 3% to close at Rs 223.30 on Thursday, with much of the selling happening in the last hour of trading. Traditionally, existing shareholders in a company tend to book profits ahead of a follow-on public offering (FPO).

The logic is that the FPO has to be priced at a discount to the market price if it has to find takers. But with the government looking at a price range of Rs 240-250 per share through the auction method, it remains to be seen if the existing shareholders in NTPC would go in for the time-tested formula. If they sell now, there is a chance that they will have to pay a higher price to buy back that quantity through the auction route. Unlike in the conventional book-building method, shares are allotted to the highest bidders in the auction method.

Contributed by Reena Zachariah & Santosh Nair.